Prices for rapeseed/canola and their respective oils could fall in the European Union in July and August but they will likely bounce on rising demand in the autumn, Hamburg-based analyst Oil World said on Tuesday.
Rape oil was expected to see a strong competition from cheaper soyoil and palmoil in the coming months. "A key factor during July-September 2006 will be the higher share of soya oil and palm oil used as a feedstock for biodiesel production at the expense of rape oil," Oil World said.
"This will reduce EU rape oil demand, keep EU rape oil stocks very high and is likely to be bearish for rape oil prices as well as rapeseed crush margins," it added.
Between October and March, however, rapeoil demand from the EU biodiesel industry would again increase sharply and lead to a rebound in rapeseed and rape oil prices, the analyst said. Yet, Oil World stressed that prices would mainly depend on some uncertainties including the actual production in the EU.
The analyst said it had slightly revised downwards its estimates for the EU's 2006/07 rapeseed output at 15.6 million tonnes, from 15.5 million last year. The average EU yield would be at 3.0 tonnes per hectare, down from 3.25 tonnes last year.